Yesterday, the Federal Council published the amendments to the Capital Adequacy Ordinance and the dispatch on the revision of the Banking Act. SwissHoldings supports the goal of a stable financial system. At the same time, the impact on companies and the Swiss financial centre must be carefully considered. The association’s member companies are dependent on internationally competitive banks and an attractive capital market. Balanced and internationally harmonised regulation is an important locational advantage. However, the current draft goes beyond international regulatory standards and would have a negative impact on the economy as a whole.
The lessons learnt from the Credit Suisse crisis and the resulting measures taken by the Federal Council pursue a justified goal: to strengthen the stability of the Swiss financial system. SwissHoldings clearly supports this concern. With regard to capital adequacy requirements for foreign investments, however, the Federal Council is sticking with the maximum option, which was rejected by a broad alliance of business associations.
Considering the impact on the real economy
Internationally established companies depend on competitive banks and a functioning capital market. Regulation is therefore needed that strengthens the stability of the domestic financial system without unnecessarily tightening the financing conditions for companies. However, higher capital requirements would do just that. Rising refinancing costs and more restrictive lending would consequently have a negative impact on the real economy. Against the backdrop of the current geopolitical environment and the increasing pressure on Switzerland as a business location, Switzerland cannot afford this.
International coordination instead of national unilateral efforts
Switzerland already has a very strict regulatory regime by international standards, not least due to the full implementation of the Basel III standards. Additional tightening that goes beyond these standards harbours the risk of regulatory unilateralism and the associated loss of competitiveness. SwissHoldings believes that banking regulation needs to be further developed in line with two principles: international harmonisation and a risk-based approach. This is the only way to strengthen the stability of the financial system without jeopardising the financing options of companies and the attractiveness of Switzerland as a business location.
Contact
Gabriel Rumo | Director | +41 (0)31 356 68 68
